The Sugar Mess

November 23, 1985

The American sugar industry has long been in a sticky mess. It is about to become a stinking mess.

Because of reduced domestic demand and competition from heavily subsidized foreign imports, the federal government has given American sugar growers three forms of protection against the economic realities of the open market. It restricts imports with a stiff set of quotas. It maintains artificially high price supports that inflate the cost to consumers far above the world market price for sugar. And it operates a supposedly self-sufficient loan program for sugar growers that allows them to turn crops over to the government and pocket a profit desite adverse market conditions.

In an attempt to play Mr. Nice Guy to sugar producing allies, the Reagan administration recently relaxed import quotas to the point where the nation could shortly be flooded with 600,000 more tons of sugar than the market can bear. In professed retaliation, sugar growers have begun forfeiting their loans and turning their crops over to the government, pocketing 18 cents a pound without paying interest or other charges.

Worse, some growers in Hawaii are not only dumping their crops on the government, but are also simultaneously fulfilling commercial contracts by buying and reselling cheap foreign sugar. Analysts predict that growers across the country may follow suit, gouging taxpayers as well as consumers.

The government does owe something to the nation`s 15,000 sugar growers and the 1.3 million farmers who produce corn for the sweetener market and hide behind the same protectionism. The government should haul out the dreaded term ``linkage`` and stop being sweet to foreign buccaneers, making it clear it will no longer tolerate these attacks on its economy from supposed friends. The subsidy schemes of the European Community are so out of hand that it is selling refined sugar on the world market at less cost than raw sugar.

But the United States must get tough on domestic manipulators as well. The fact that American consumers and taxpayers are being taken by locals instead of foreigners doesn`t make it any more tolerable.